The Consumer Credit Act is a huge piece of legislation. Understanding it is not an easy task, made harder still by all the amendments and reforms which have taken place in recent years. Nevertheless, these changes have been designed to benefit consumers by providing further clarification and additional rights. In this section, we will look at the basics of the Act, types of credit agreements, consumer rights, creditors’ obligations and what to expect in situations of default or arrears.
The first step is to ask yourself a few basic questions:
- What type of credit agreement do you have?
- How was the contract made?
1. Types of credit agreements
The Consumer Credit Act will regulate the majority of credit agreements. There are exceptions, such as mortgages, loans secured on property, short term agreements and charge cards. In addition to credit and store cards, personal loans and overdrafts, a credit agreement will govern the following types of contracts:
- Finance options for the purchase of goods and services (credit sale agreements)
- Hire purchase agreements
- Hire agreements
- Conditional sale agreements
Credit sale agreements
This is the most common type of financing option when purchasing high-priced goods and services such as cars, electronic goods, or home improvements. It is basically a loan to over the purchase price of the item, with the loan paid back the loan in equal monthly instalments over several months or even years. The consumer (the ‘debtor’) may pay a large initial deposit (such as with the purchase of a car), or not pay anything at all for the first year or two. Either way, you will legally own the goods as soon as the credit sale agreement is made, even if you have paid nothing at all. Where ‘interest-free credit’ is advertised, you will have a specified time to pay back the outstanding balance, otherwise the due balance will automatically roll into a longer term credit agreement where interest will be payable.
Hire purchase (HP) agreements
Under this arrangement, you will pay monthly instalments to hire the item, but will not legally own it until the final instalment has been paid. This type of agreement may also give you the option to buy with a lump sum at the end of the period, such as with ‘balloon payments’ on car finance.
Hire agreements
This is simply the hire of goods at a (usually low) monthly fee. You will never own the item, but must keep up the payments for the term of the contract to avoid having the goods repossessed and being sued for the outstanding debt.
Conditional sale agreements
This is very similar to the HP agreement described above. Even though you will be in possession of the goods in question, you will only own them on the condition that you have paid all the instalments. However, the agreement may also specify other conditions to be met before ownership can take place.
2. Way in which the contract was made
Basically, this refers to where you signed the contract. Was it in the presence of the creditor at their place of business? Was it in the presence of the creditor but away from their place of business? Was it at home? Or were you with a broker – either in their office or at home? This will have important implications for your cooling off rights, the information which must be supplied to you and the way in which it must be presented. We will look at cooling off and required information in the following two sections.
- CCA: Required Information
- CCA: Your Rights
- Ending a Credit Agreement
- Defaults, Arrears and Debt Collection Agencies
- Debt Management Companies
- Accessing your Credit File
Hi there
I have a question… Me and my husband have agreed to buy new furniture for our house on a finance agreement (monthly instalments). His credit score was not sufficient enough so he asked his sister to provide her bank details for the agreement which she agreed to do so. So the payee in this case for the purpose of the company seems to be his sister although my husband wil be making the payment into her account for it to be paid monthly. However the sales rep handed me the invoice/agreement with terms and conditions on the back to sign off which i did. My question is… in case there is a default in making the arranged payments what happens? Do creditors chase the person signing the agreement (me) or the person making the payment (husbands sister)?
Please help….
I bought a car on finance in November 2016 & was diagnosed with terminal cancer in march 2017 I have had to give up work but kept up the payments until now because I’ve ran out of money the dealership said I can return the car but they want a settlement figure of 3700 I don’t have this money & would like to know what will happen iff I don’t pay ?? Thanks paul
I have a provident loan man call to my home which has Dublin city council camera fitted in and I paid my loan man 100:00 euro who says he didn’t get it and at the start of my loan my book got ruined so I rewrote the page and my loan man said it was ok but the following month he never deducted my money have I rights as the provident say they investigated it which was very poorly done and got the dates mixed up even which is disgraceful only spoke to my loan man not me and sent me one letter saying they can’t follow through even tough their will be camera footage provident is loan sharks can you help me please thanks
My husband bought a adjustable bed on hire purchase he as since died am I responsible for his debt which I can’t afford
Hi – my dad asked for assistance from Virgin Media as his email had stopped sending and receiving. They took over the computer remotely and fixed the problem. However, when he went back into his emails the folders were missing. Virgin have said as they do not support the programme for the email (Windows) they are not responsible for recovering this and cannot help. CA have advised he can claim under the Consumer Credit Act, but we are not sure how we would do this or if this is the correct way. They also advised he could claim compensation for docs / folders lost. Are you able to advise how best to do this and if compensation can be claimed? To be honest all he wants are his folders back as they are important docs he had saved. Any advise please?